U.s. Senator Wants To Kill Tax-free Bonds For Arenas

If you think Broward County's arena-building plan amounts to a government-backed subsidy for a wealthy sports team owner, you've got distinguished company.

The senior U.S. senator from New York agrees.

Sen. Daniel Patrick Moynihan recently introduced legislation to close what he calls a "loophole" in federal tax laws by eliminating the financing of sports arenas with tax-free bonds - the way Broward wants to build a $212 million arena for the Florida Panthers.

Moynihan's legislation, called the Stop Tax-Exempt Arena Debt Issuance Act, has some county officials nervous.

If the law passes soon, which is possible but not likely, Broward might be forced to change the way it borrows money for the recently approved project.

The county had been planning to issue tax-free bonds to raise cash for arena construction. If it uses taxable bonds with higher interest rates, the annual mortgage payment could rise more than $2 million yearly, from $12.8 million to about $15 million, and profits the county hopes to make from the deal would be delayed.

The Panthers also make more money when interest rates are low, because the team makes a smaller contribution toward repaying the mortgage.

So on Tuesday, county commissioners passed a motion authorizing staffers "to take those actions necessary to alleviate the impact of proposed Senate Bill 1880."

"Commissioners, it's short of assassination," said County Administrator B. Jack Osterholt, explaining just what steps he would consider.

County Finance Director Phil Allen said he was contacting the 20 or so other communities building or studying new arenas and stadiums, including Dade County, to put together a "joint effort" attacking the Moynihan bill.

Ideally, Allen said, projects such as Broward's already approved by local governments would be exempted from any new law.

County commissioners seemed to brush aside the threat of the Moynihan legislation, saying the Senate would probably adjourn for the summer before the bill was considered. By the time the body reconvenes, Broward would have borrowed its money for the Panthers project.

"It's unlikely that this legislation is going to affect the building of this arena," commission Chairman John Rodstrom said.

Moynihan introduced his bill shortly after the Congressional Research Service released a report last month asserting that using tax-exempt financing amounts to a $75 million federal taxpayer subsidy on a $225 million stadium, or about 34 percent of construction costs.

The study also found that a sports arena's economic benefits to a city were almost always overstated.

"Building new professional sports facilities is fine by me," said Moynihan in a statement included in the Congressional Record earlier this month. "Let the new stadiums be built. But please, do not ask the American taxpayer to pay for them."

In other arena developments on Tuesday, county commissioners signed an agreement with the state Department of Community Affairs allowing construction to start before the state issues its final development order. Sunrise commissioners also signed off on the agreement Tuesday night.

In much the same way the Miami Arena was built, Broward would have the authority to prepare the land and begin construction, but must wait for final state approval before finishing and using the building.

Allen also announced that, as expected, the building had been granted a $2 million yearly state sales tax rebate that can be used for construction. The rest of the construction money will come from an increase in hotel bed taxes from 3 percent to 5 percent, and from the net sales of food, parking and other items at the arena.